Performance outcomes, fuzzy signals, and the charisma effect: how we evaluate leaders from a distance

You might hope that senior leaders, the people who run countries, corporations or other organizations, are chosen on the basis of a performance track record that can be directly linked to their decisions and actions. But, as research by John Antonakis and Philippe Jacquart reveals, this is far from the truth.

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Instead, depending on the circumstances, we are more likely to evaluate top level leader competence based on the performance of the institutions they lead, regardless of the leader’s contribution to that performance or, more surprising still, on how charismatic they appear.

John Antonakis is a professor of Organizational Behavior. His research is currently focused on leadership development, power, personality, and causal analysis.

Every day, thousands of important decisions are made that are based, at least in part, on an assessment of the competence of senior leaders. It might be a headhunter hiring a senior manager, a stock analyst making a sell recommendation following a CEO’s statement, or millions of consumers deciding to trust a product on the strength of a CEO’s comments.

The links between the leader’s actions and that leader’s actual impact on organizational outcomes are often not clear

It would be nice to think such decisions are based on an objective evaluation of a leader’s competence. However, the links between the leader’s actions and that leader’s actual impact on organizational outcomes are often not clear. Instead, too distanced to directly observe the effect of a leader’s actions and decisions, we rate leaders using criteria such as an organization’s performance, and how leader-like a leader behaves.

Evaluating leaders

In their paper When Does Charisma Matter For Top-Level Leaders? The Effect of Attributional Ambiguity business school academics John Antonakis (HEC Lausanne, University of Lausanne) and Philippe Jacquart (EMLYON Business School) examine how we evaluate and select leaders, and the role that two well-known psychological theories about leadership play in this process.

The first theory – attribution theory – suggests that we relate leadership competence to organizational outcomes. If we perceive an organization as successful, we assume its leader must be a good leader, and evaluate the leader accordingly. Good leaders get retained and headhunted by other organizations. Poor organizational results are equated with poor leadership. Poor leaders are fired and replaced. These attributions are made even though we rarely have the information required to confirm a causal link between leadership and organizational outcomes.

The second theory – inferential theory – suggests we evaluate leaders based on whether they match up with an idealized version of a good leader, and possess the leader-like qualities we expect in such a leader. One characteristic strongly associated with good leaders is charisma. Leaders convey charisma using impression management techniques, and the way they package and communicate messages. For example, they might articulate a vision that others can identify with, create emotional links with followers, and use techniques such as stories and metaphors to deliver powerful messages.

The authors conducted two studies to help them explore the role of attribution and inferential processes in leadership evaluation. They looked at each process separately but also, and this was key to their study and the importance of their findings, how the processes interacted together.

The first study focused on US Presidential elections results from 1916 to 2008, and how the Republican and Democrat contenders fared. To investigate the attribution process with respect to the incumbent party, the authors used country economic performance data, such as GDP and inflation levels, and how that related to voting for a particular candidate. For the inferential processes, the authors used objective measures of Presidential candidates’ charisma by coding charismatic leadership tactics and techniques deployed during speeches.

In a second study, the authors devised an experiment focusing on CEO leadership, using a fictitious four-minute TV business report featuring a company called BlueTech. There were six variations of the report made. In each version the video’s content, which included a statement from the CEO, third-party observations about the CEO, and financial information about the company, created a different impression about the CEO’s charisma and the company’s performance. The CEO’s level of charisma could be high or low. The firm’s performance was either clearly good, ambiguous, or clearly poor.

Each participant in the experiment viewed one variation of the video and was asked to vote, as if they were members of the board of directors, on whether the current CEO should be reappointed or replaced.

The charisma effect

The results suggest we use both attribution and inferential processes to evaluate leaders, though results did vary somewhat depending on a political or business context. In general, when performance data is relatively unambiguous, and we are unable to observe a leader at close quarters, we equate leadership competence with outcomes. That is, when we judge a leader’s competence the litmus test is whether their institution is performing well or badly, and we reward or punish that leader accordingly. For instance, when the economy is strong, the candidate from the party of the incumbent President, or the incumbent per se, is rewarded with more votes.

When outcomes are ambiguous, evaluators are influenced by how leader-like the leader acts

However, when there are mixed signals about performance, when outcomes are ambiguous, the inferential effect, charisma, kicks in and evaluators are influenced by how leader-like the leader acts. The more charismatic the leader, the more favorably he or she is evaluated in ambiguous performance situations.

In the CEO study, though, the authors found that charisma influences the decision making of raters even when performance data is strongly positive or negative. If a CEO is charismatic it may reinforce the positive impression associated with good performance; charisma even helps them in the face of bad performance. However, charisma helps most, for both U.S. presidents and CEOs, when performance data are ambiguous. It seems that in the absence of strong performance signals charisma helps give leaders the benefit of doubt.

Although the authors’ studies focus on leadership selection and reselection, their findings are likely to be relevant in many situations where individuals are evaluated in “fuzzy” performance situations. Whether a CEO, or head of an international division, or a job candidate, individuals are constantly being judged. There are often times when evaluators do not have access to clear performance data; thus, how individuals “sell” themselves (i.e., using charisma) is likely to play a role in the evaluation process.

This research suggests that from a leader’s perspective it makes a lot of sense to learn and practice charismatic leadership tactics and techniques, particularly when leaders know that performance indicators will be clearly ambiguous. At the same time, people evaluating senior leaders should “inoculate” themselves against the charismatic charm of senior leaders and, as far as they are able, focus on obtaining performance data that is directly traceable to the leader.

CEO with ambiguous performance is rated more highly than non-charismatic CEO with good performance

One final and interesting observation from the research is how powerful the charisma effect is in certain circumstances. So much so, for example, that it may pay a charismatic CEO in charge of a poorly performing organization to muddy the performance waters, thus allowing the charisma effect to kick in and influence evaluators. Indeed, as the research shows, a charismatic CEO with ambiguous performance is rated more highly than non-charismatic CEO with good performance! Time to stock up on “How to be Charismatic” books.